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Differentiation is Key in the Smart Card IC Wireless Market

5th July, 2004

US : Manufacturers of smart card ICs are focusing on offering increasingly advanced ICs. To differentiate themselves from competitors, smart card IC manufacturers will have to focus on vital competitive parameters of price, technology performance, and time-to-market. Research and development investment toward improved chips is also needed, which proves to be difficult in a shrinking profit margin environment.

New analysis from Frost & Sullivan, World Smart Card IC Market, reveals that this market generated revenue totaling $1.40 billion in 2003. Total market revenue is expected to reach $2.38 billion in 2007.

Global system for mobile communications (GSM) penetration of less saturated markets in Asia and the Americas is rising, and telecom operators are promoting higher-memory SIM cards to provide value-added services. Increasing demand for high-memory 64k and 128k SIM cards as well as for Java cards in particular are improving the GSM product mix.

“The arrival of 3G and 2.5G services is boosting high-end smart card IC chip sales since they require larger memory capacity to store new features and bigger files,” says Industry Analyst Anoop Ubhey.

The use of contactless technology by retailers and in various transit projects worldwide is also spurring high uptake of smart cards. In addition, the retail and payment application have shown tremendous potential for contactless smart cards.

“Migration to EMV standard in the banking sector is also creating substantial opportunities for smart card IC chips,” states Industry Analyst Jafizwaty Haji Ishahaq.

Government interest in ID security applications post 9/11 brings further potential into the chip-based market. The launch of high volume national ID projects such as the China national ID project has generated enormous opportunities for this industry.

“Using smart cards not only provides easy identification and decrease in instances of fraudulent activities, but also benefits governments through the integration of multiple applications such as retirement benefits, e-purse, and so on,” says Programme Manager Prianka Chopra.

Nonetheless, major smart card projects that require expensive infrastructure upgrades can create cost issues for the implementer and lead to delayed projects.

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